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Passport to Profits: Why the Next Investment Windfalls Will Be Found Abroad and How to Grab Your Share by MARK MOBIUS

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CHAPTER 1

Introduction to Emerging Markets

Emerging markets are the frontier of the investment world and as we move forward in this wonderful business arena, we continue to pursue new markets. When we first started investing in emerging stock markets in 1987, we were at the frontier of investing in global equity markets. In those days, many countries were not open to foreign investors and many did not even have stock markets. Gradually more and more countries finally abandoned the socialist/communist economic model. Governments came to realize that a market economy would yield faster growth. This resulted in both bond and stock markets opened not only for local investors but foreign investors.

Of course, before we entered a new market there were many administrative and technical details to surmount such as establishing a custodial bank to safe keep our securities, studying the local laws and regulations, learning about the complexities of specific country trading systems and many other details in addition to the main task of learning about the possible company investments. After a great deal of hard work we went from only five stock markets in 1987 to about 60 markets today. From US$100 million in 1987, the emerging market funds grew to more than US$40,000 million.

We recognize that among the emerging markets is a long list of new markets and they are showing even faster growth.

Why Seek New Frontier Markets?

The simple answer is growth. Between 1989 and 2011 frontier markets ...

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